The Supreme Court of Victoria has today determined that co-working company Victory Offices (ASX: VOL) be wound up, bringing to a close a protracted legal process for the embattled serviced offices provider and its creditors.
The decision comes nearly five months after the originating creditor and retirement village operator Zig Inge Group first applied to have VOL wound up, and means that liquidators from Rodgers Reidy will manage the process of returning funds to creditors.
Such creditors include Zig Inge Group which claimed it was owed nearly $1 million, KKR & Co subsidiary Maia Financial which was seeking $2.5 million from VOL, and a late addition to the bunch being law firm Ashurst, which sought a further adjournment of the matter at a hearing this afternoon but ultimately failed in its bid.
The decision bookends an extended period of collapse for the company, which manages co-working spaces, private offices, hot desks, virtual offices, meeting rooms, board rooms, training rooms and day suites in the Australian Capital Territory, Queensland, Victoria and Western Australia.
Having been unable to return to form once COVID-19 restrictions eased nationally, the company exited the co-working market in Sydney earlier this year and in 2021 was actually locked out of offices in the New South Wales capital and in Melbourne over allegations of unpaid rent.
Today's decision means recently appointed administrators Danny Vrkic and Daniel O’Brien from DV Recovery Management (DVRM) will no longer be operating the company which Associate Justice Steffensen noted was "clearly insolvent".
A further adjournment of the matter was inappropriate according to Associate Justice Steffensen, who said yet another delay to making the declaration achieved today would not be in the best interests of creditors.
It comes after Vrkic and O’Brien held the first meeting of VOL’s creditors last Friday - a meeting that was described by the lawyer representing Ashurst as not a "proper meeting".
Ashurst’s lawyer ultimately sought to adjourn the winding up matter at least until a "proper" meeting could occur this coming Friday - whereby the law firm would seek to remove Vrkic and O’Brein and have different voluntary administrators appointed.
However, counsel representing Zig Inge Group - Simon Rubenstein - disagreed with that position, noting that he only received an Ashurst affidavit about 10 minutes before this afternoon’s hearing.
Instead, he argued the administrators’ failure to secure a draft deed of company arrangement (DOCA) for creditors to assess meant there was a "very clear need for the court to act diligently and appoint liquidators today".
Associate Justice Steffensen sided with Rubenstein, and said the affidavit evidence relied upon by Ashurst, which claimed it was owed $59,000, did not satisfy that it was in the interests of creditors for the DVRM-led administration to continue.
“It seems that the only reason for Ashurst to wish for the first meeting of creditors to occur on Friday is so they may propose alternative administrators to be appointed, which is what they attempted to do last week but weren’t given the opportunity to put that resolution forward,” Associate Justice Steffensen said.
“In the circumstances of this case, where the company is clearly insolvent, the winding up proceedings have been on foot since June, and the concerns with respect to the conduct of the administration to date where there is no evidence that any investigations have been undertaken…these are the very types of matters that mean that a liquidator should be appointed to the company as soon as possible.
“And those are the orders that I shall make today.”
Trading of VOL shares remains suspended.
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